Flood Insurance Deadline Looms

As legislators return to Capitol Hill, they face some unfinished business regarding the fate of the National Flood Insurance Program (NFIP).

The oft-extended NFIP is due expire on Sept. 30th. In July, the House passed another short-term extension of the program, pushing the expiration deadline back to March 31, 2010. Proponents of the program are urging the Senate to pass a similar bill to keep the program alive while a long-term solution is crafted.

"If the program expired, real-estate transactions in flood-prone areas would halt, at a time when growth in home sales is crucial to our nation’s economy," David Sampson, president and CEO of the Property Casualty Insurers Association of America (PCI), said in a statement. "We cannot afford to compound the economic challenges our nation already faces by allowing the NFIP to lapse. This legislation, if enacted, will ensure that homeowners continue to be protected.”

The future of the NFIP was clouded by a 2008 report by the U.S. Government Accountability Office (GAO) which said that the NFIP owes the U.S. Treasury $17 billion and is ill equipped to meet losses in the event of a future catastrophe. Another factor complicating renewal of NFIP is whether to include coverage for wind damage in the program.

“We will continue to work with Congress to move as soon as possible on a long-term extension, which will reform this important program and restore its fiscal soundness,” Sampson said. “We look forward to collaborating with the House and Senate on a long-term reauthorization that will protect consumers for many years to come.”